Van Dyck Law, LLC is a full service Estate Planning & Elder Law practice. They write about comprehensive planning in the areas of wills, trusts, powers of attorney, medical directives, Elder Law and probate & estate administration.

June 2018

06/29/2018

“Whether you are leaving a huge financial windfall behind for your offspring or a smaller monetary account, it is important to create an estate plan which allows greater control, privacy and security of your legacy.”

Estate planning can be thought of as the process of anticipating and arranging, during an individual’s life, for the management and disposal of his or her estate during the person’s life and after death, while minimizing gift, estate and income tax. However, 55% of Americans don’t have a will, reports Wealth Advisor in the recent article, “The 3 Reasons Why People Do Estate Planning.”

It’s really important to have a will, even if your total assets are minimal. While you can find a will online, you’re much safer visiting with a qualified and experienced estate planning attorney to develop a customized plan that works for you. An estate planning attorney has the in-depth knowledge and skills to make suggestions that will help determine your future asset allocations.

When considering a legacy and to whom and what to leave behind, there are three reasons why people do estate planning: probate fees and tax reduction, asset protection and control and management.

Probate Fee and Tax Reduction. When a person has more than a certain level of assets, they may have to pay state and federal estate taxes, depending upon the value of the accounts and based on where they live (some states have estate taxes, while others don’t). An experienced estate planning attorney can help explain the laws and help you to make wise decisions as to whom, where, and when to designate your assets. Working with a legal professional who’s well-versed in estate planning, will help you to reduce probate fees and inheritance taxes.

Asset Protection. It’s critical to protect your assets, like safeguarding your assets from spend-down (the process of reducing assets to qualify for Medicaid) in a nursing home situation. That’s a great reason to be proactive and develop an estate plan.

Control and Management. This is a big reason why many families engage in estate planning. Properly done, it eliminates worries and ensures that your final wishes regarding asset distribution are carried out.

Estate planning also avoids any guessing and provides a detailed plan of who, what, where and when for your heirs during a trying time.

Assets and Liabilities. Do a complete review of both of your assets and liabilities. Assets include bank accounts, stocks, bonds, house, cars, retirement plans, insurance contracts and other investments. Liabilities are things like your credit cards, student loan debt, car loans and mortgages. In addition, note that there are rules in community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin), where asset ownership is treated differently: in these states, the law presumes that assets will be owned jointly.

Daily Financial Management. You should next think about how’ll manage your financial obligations on a regular basis. Some couples combine their checking accounts, and some keep separate checking accounts. However, you should create a new joint account, into which both parties make a monthly contribution. Joint expenses are paid from the new account, and other personal expenses are paid with individual accounts.

Beneficiary Designations. Your retirement plans—like your IRA and 401(k)—have named beneficiaries. These should be checked regularly. The same thing should be done with your insurance policies and annuities. This is the perfect time to review who is currently designated, because any agreements from your first marriage may potentially inhibit your ability to update your beneficiaries. They should also be reviewed.

Update Your Estate Plan. A will states your final wishes and details how certain property will be distributed to your heirs. It also designates guardians for minor children and your executor, the person you nominate to make sure your wishes get carried out. It is an excellent time to review your will, to see if you should execute a new one or modify the existing one. Blended family dynamics can also have an impact when reviewing your estate plan. If either spouse has children from a previous relationship, adjustments to your plan may be necessary.

Trusts and Trustees. Ask your estate planning attorney about trusts, like a bypass trust, a qualified terminable interest property (QTIP) trust, or a spendthrift trust. One of these or another kind of trust may be a useful way to transfer wealth to children, while imposing some restrictions. Dividing your assets between a surviving second spouse, the children from that marriage and any children from a prior marriage may result in some tension. One way to avoid this is to give an independent trustee the ability to make adjustments, so everyone is treated fairly and according to your instructions.

Thoughtful planning will let you meet your family’s fiscal needs and create a strong financial future with your new spouse.

06/27/2018

“George Michael’s ex-boyfriend has joined the battle for a slice of the late superstar’s millions.”

The Careless Whisper singer, who passed away in December 2016, left his multi-million estate and properties to his two sisters Melanie and Yioda.

However, Trust Advisor’s recent article, “George Michael Exes in Legal Fight” reports that Kenny Goss, George’s former partner of 15 years, is claiming a large part of his estate, on the grounds he helped the troubled singer through hard times, The Sun reports.

The American businessman has hired counsel. He claims that George always told him he’d look after him, “see him right and that he would not want for anything,” a source said.

Due to the fact they were together for many years and Kenny really looked after George a great deal, he feels that George’s will doesn’t accurately reflect this.

Kenny joins Lebanese hairdresser Fadi Fawaz, who was with George for five years until his death on Christmas Day 2016, in challenging the will. Fawaz was instructed to move out of his ex-lover’s mansion. Fadi also won’t inherit the three-bedroom home in London’s Regent’s Park, where he’s currently living. The Mirror reports that his hopes of owning the property are “all but over.” An insider told the paper: “Fadi realizes his days there are likely to be numbered, as it’s been made clear he won’t be inheriting the place.”

“He’ll be sad to leave, as it’s where he and George shared so many happy moments.”

Fadi said earlier this year that he was forced to sell the car George gave him because of his debt. The Sun reported George’s possessions were being repossessed, after Fadi fell behind with payments on the singer’s North London home. He’s now selling off George’s possessions. In addition, the singer’s family also gave Fadi money, despite claims he’s broke.

Fadi was sleeping in his car on Christmas Eve 2016—the night of George’s death. He found George’s body in the morning and called the police.

There is no husband, no children and no obvious heirs. As a result, there’s been some speculation over what will happen to his estate. George was godfather to Martin Kemp’s children Roman and Harley, who could be in line to inherit a share, along with Geri Halliwell’s daughter Bluebell—despite his ex, Goss, actually being her godfather.

06/26/2018

“The challenge: Trying to discern truth from fiction, and marketing from reality, when it comes to assisted living facilities.”

Assisted Living facilities are a popular and rapidly increasing segment of senior housing. However, what many people don’t know is that some assisted living facilities are “non-medical” models of care—not requiring nurses or any medically trained personnel onsite daily. This misunderstanding can create real problems for those residents with multiple complex and chronic medical issues.

Assisted Living does not include senior housing such as active adult communities or skilled nursing facilities. Assisted living communities are licensed facilities that provide private housing (in the form of at least a private room with a private bathroom, a kitchenette, and a door lock) to each resident. They also provide meals. They provide, when needed, personal care, nursing, social work, transportation, and pharmaceutical services.

According to the National Institutes of Health, assisted living facilities provide care to a large number of older adults, including many with complex health problems. The most common reasons for entering AL are dementia and functional impairment, but most residents (94%) have at least one chronic medical condition, with 76% having two or more chronic conditions.

Families often don't have realistic expectations. The marketing person makes promises about what's available. However, families don't know to ask questions about the staffing levels, the supervision, and how medications are administered. Loved ones don't realize it’s not a nursing home, and that it doesn’t have skilled nursing care.

The reality of this lower level of care may result in loved ones receiving a midnight call, that Mom got confused, wandered away from the facility and is now lost. Or that Mom’s fallen and broken a hip. One fall can change the direction of care needs forever.

At Van Dyck Law, we have taken strides to help educate our clients on services available to clients and their aging loved ones. Once you are a client at Van Dyck Law, you have access to the services of Sheli Monacchio, our Director of Life Care Resources. Sheli can help educate you on the differences between the communities and narrow down those that may be appropriate for your family member. She can also work with you to see if options for care in the home would be safe if this is your family’s preference. Sheli has an extensive background in working with seniors and their family in helping to provide various solutions based on the care needs and budget of many aging adults. No family is exactly alike. Sheli will hold your hand through the daunting process of deciding on Long Term Care options and help you to find the right solution for your family.

06/25/2018

People nearing or just beginning their retirement may have plenty of life experience under their belts, but many are enjoying at least one brand-new feeling: a sense of freedom. At 60, the majority of people shift from saying where they live is determined by their responsibilities—like family and work obligations—to saying they're free to live wherever they’d like. That’s according to a survey by Merrill Lynch and Age Wave, a research firm focused on the aging population. Many retirees do actually relocate. A total of 64% have moved or anticipate moving in retirement.

Kiplinger says, in its article “The 20 Best States for Your Retirement,” that many factors come into play— such as proximity to family and weather preferences. However, the article leaves personal preferences out; focusing on the financial angle.

All 50 states are ranked for retirement based on quantitative factors, determining that the best states for retirees will have low living costs and lesser tax burdens, and quality health care options. Kiplinger also sought out states that are healthy—both economically (with well-balanced state budgets) and physically (with a fit and active senior population). They also looked at states with relatively prosperous residents age 65 and over.

The rankings can be seen from the link to the article (above), but here are the factors that should be considered when making decisions on where to relocate:

Taxes on retirees, based on Kiplinger's Retiree Tax Map, which divides states into five categories: Most Tax Friendly, Tax Friendly, Mixed, Not Tax Friendly and Least Tax Friendly;

The state’s cost-of-living, with data provided by Sperling's Best Places. That includes overall costs—across all age groups—for housing, food and groceries, transportation, utilities, health care and miscellaneous expenses;

The average health care costs in retirement from HealthView Services. This includes Medicare, supplemental insurance, dental insurance, and out-of-pocket costs for a 65-year-old couple who are both retired and are expected to live to 87 (husband) and 89 (wife);

The rankings of each state's economic health from the Mercatus Center at George Mason University. These are based on various factors such as state governments' revenue sources, debts, budgets, and abilities to fund pensions, health-care benefits and other services;

The rankings of the health of each state's population of residents 65 and over from the United Health Foundation. These are based on 34 factors, ranging from residents' bad habits to the quality of hospital and nursing home care available in the state;

Household incomes and poverty rates from the U.S. Census Bureau; and

Population data, including the percentage of the population that is age 65 and older, from the Census Bureau. Note that these statistics are highlighted in the rankings for the readers’ benefit, but weren’t factors in Kiplinger’s methodology for ranking the states.

06/22/2018

“It’s been 16 years since Victor Posner passed away, but the legal war over the remnants of the master corporate raider’s real estate empire lives on.”

The former-girlfriend-turned-business-associate of corporate raider Victor Posner, who was named the primary beneficiary of his $321 million estate in 2002, filed a lawsuit against a prominent law firm for breach of fiduciary duty, legal malpractice and civil conspiracy.

Wealth Advisor’s article, “$300M Miami Estate Fight Gets Ugly, 16 Years Later,” reports that, according to the complaint filed in Miami-Dade Circuit Court last month, Brenda Nestor alleges that she suffered damages as a result of “negligent and reckless” legal advice the Akerman law firm provided to her court-appointed successor of Posner’s estate.

In 2015, Judge Celeste Hardee Muir removed Nestor, after she allegedly disregarded court orders for her failure to provide a full accounting of her actions as the Posner estate’s personal representative. The judge replaced Nestor with lawyer Philip von Kahle.

Nestor accused von Kahle—who is not named as a defendant in her lawsuit—of making her a scapegoat for the Posner estate’s dire finances. Her lawsuit states that the attorney is exercising his newly-developed 20-20 hindsight of the Great Recession that occurred in the late 2000s to early 2010s and that von Kahle started to second guess thousands of transactions she made, while acting as personal representative. She said that von Kahle was trying to “Monday-morning quarterback” her actions during her 13-year appointment as personal representative—many of which were approved by the probate court.

Nestor claims that von Kahle hired the Akerman law firm, which provided him with improper advice, such as recommending he file a lawsuit in 2016 against Fidelity to claim a $23.1 million bond she posted back in 2002 that allowed her to operate Posner’s real estate business through his estate. This lawsuit claims that Nestor caused the Posner estate to lose $375 million in value to negative $50 million during her tenure as personal representative. Her successor also accused Nestor of pouring “tens of millions of dollars into worthless businesses that were insolvent and had no value to the estate.”

Philip von Kahle also alleges that Nestor used estate funds and improperly distributed money to herself and companies, in which she had a personal stake. In her lawsuit, Nestor accuses Akerman of breaching its fiduciary duty by failing to advise the court of conflicts of interests von Kahle had regarding the sale of assets by self-dealing, of which the law firm had knowledge.

06/20/2018

“While most Americans haven’t saved enough for retirement—GOBankingRates reports that 42 percent of us have less than $10,000 saved and expect to retire “broke”—the future for freelancers looks especially bleak.”

More than one in three workers today are doing on-demand work, like driving for Uber and Lyft, renting their homes out on Airbnb, doing handiwork on TaskRabbit, or traditional side jobs in sales, writing, website development and graphic design, according to Intuit and Emergent Research. These on-demand gig workers will total 92 million in the next four years, making up 43% of the workforce by 2021.

The New York Post’s recent article, “How to save for retirement if you work in the gig economy,” says that 27% of workers, whose gig job is the main source of income, have nothing saved for retirement and 21% have less than $1,000, according to Betterment’s Gig Economy and the Future of Retirement report. The online investment company surveyed 1,000 US gig workers aged 25 and older, half of whom rely on their gig economy job as their primary source of income and half who supplement a full-time job with a side job.

About 70% of full-time “giggers” say they’re unprepared to maintain their current lifestyle during retirement. A total of 20% anticipate that they’ll keep picking up gig work, even after they are supposed to be “retired.” A total of 12% of those with full-time jobs will keep their side-hustle, after they’ve “retired” from their 9-to-5 jobs to make ends meet.

The issue is that most gig workers (61%) are using their side jobs to pay off debt, which stacks up to more than $10,000 for almost half of them. They are not working for or planning for the future. Since so many are self-employed, it’s their responsibility to plan a retirement account, compared to those who work for a company who may have a 401(k) set up for them.

The Betterment report noted that gig workers are tech-savvy when it comes to managing their side jobs, but they’re not using the same technology to take care of their finances. While 59% use a digital platform for work, just 19% use an automated savings tool or app to save money. Can you believe that 42% of them store their cash at home? Those dollars aren’t growing, or even earning compound interest.

If you’re a gigger, analyze the amount of money you have in all of your bank accounts, any retirement accounts, and any other savings to see where you can consolidate what you’ve saved thus far. Then determine what you need to retire, and no matter how close or far away you may be to that goal, it’s time to get started tucking money away each month. No amount is too small to get started.

06/18/2018

“First-time home-buyers are often surprised by the requirements of obtaining a mortgage, especially when it comes to the down payment. One way you can improve your chances of getting a home loan, is by putting at least 20% down at the time of purchase.”

Forbes’ recent article asks, “Should You Use Your Retirement Savings to Buy a Home? The article suggests that your retirement account may be an option for the additional funds you need for a down payment on a new home. The IRS also offers some breaks for taxpayers who opt to use retirement assets to purchase a first home.

Get this: you don’t actually have to be buying a home for the first time in your life to be considered a “first-time” home buyer. The IRS defines a first-time home buyer as any home buyer who has had no present interest in a main home, during the two-year period ending on the date of acquisition of the new home. Therefore, provided that you haven’t lived in a home you owned for the last two years, you are considered a first-time home buyer, even if you previously owned a home. If you’re married, your spouse also has to satisfy this requirement.

If you withdraw money from a traditional IRA before age 59½, there's typically a 10% penalty for early withdrawal. However, the IRS has an exception that lets you withdraw up to $10,000 over a lifetime, without a penalty for first-time home purchases. You should also note that while the distributions are not subject to penalty, they are still subject to income taxes. If you’ve owned a Roth IRA for at least five years, any distributions used for a first-time home purchase (subject to the $10,000 lifetime limit) are treated as qualified distributions. This means the amount distributed will be exempt from penalties and income taxes. If you haven’t owned a Roth IRA for at least five years, your distribution may still avoid penalties but some or all of it may be taxed.

Any money you put into Roth IRAs comes out first. It isn’t subject to taxes or penalties because you’ve already paid taxes on the money before you deposited it. Therefore, the first-time home purchase exception is really only applicable after you’ve withdrawn all of your contributions. As a result, many people withdraw all of their initial contributions plus $10,000 of growth with no tax consequences.

This same exception does not apply to your retirement account through work. The only way to withdraw money from your employer-sponsored retirement plan (e.g., your 401(k)) for a home purchase, while you are working and under age 59½, is through a hardship withdrawal. Buying a home is one of the reasons allowed for a hardship withdrawal, but you’ll have the early withdrawal penalty if you’re under age 59½, and any pre-tax withdrawals or growth in your Roth 401(k) will also be taxed.

Another option is to use the 401(k) loan provision to access those funds to buy a home without the tax. Many companies also let you have longer than the standard five-year pay-back period to repay a residential 401(k) loan. However, you may have to show that you actually closed on a home. The interest you pay goes back into your own account but will be double taxed when you withdraw it.

If you plan on using the equity in your home as supplemental income in retirement, and you have trouble making payments on the loan, you could wind up losing your home and may also jeopardize part of your retirement nest egg.

06/15/2018

“When your loved one is admitted to a nursing facility, you are at their mercy. There is a significant imbalance of power in many ways. As a result, many families may find themselves feeling completely lost.”

Few of us have navigated the confusing rules and programs associated with aging in the U.S., until circumstances force us to.

Forbes’ recent article, “How Nursing Homes Can Destroy Families,” says that we depend on the people with the most experience to help us through this. However, it does not always work out for the best. In that case, as the situation for a loved one continues to deteriorate and as family members try to address mounting issues, it can take a toll on relationships. Let’s look at some of the factors:

Poor Organization. See if there’s a clear chain of command at the nursing home and find out who you should contact with your questions. Get one person to work with in order to avoid confusion. There may be a high turnover rate among employees, so try to maintain contact with the highest-level staff member and secure a secondary contact.

Misinformation. In workplaces with high turnover, some may be unsure of their own roles. Whether the staff members are new, poorly trained, or even disinterested in their positions, this is problematic because you’re relying on these employees for critical information. To avoid this, try to discuss things with one person and document every interaction. You may consider making email your primary mode of contact, so you have a written record of everything that’s been said. That record may be valuable, if there’s an issue.

Staffing Problems. Nursing homes struggle to keep employees, especially the good ones. You may quickly see how much this impacts the quality of care at many different levels, for your loved one. This could present itself in poorly maintained rooms or poorly maintained records. An understaffed senior residence can be a dangerous place. However, there may be little that you can do. This isn’t an uncommon issue and seniors could be left being neglected. Make the effort to be friendly with the staff and show them you’re invested. It will send the message that you’re kind but persistent.

Family Fighting. Families can battle over the care plan or squabble over assets, and tempers may flare. The nursing home setting may worsen this dynamic. In addition to the frustration with any gaps in care, family members may find themselves arguing about all sorts of issues.

Medical Malpractice. In some instances, a nursing home resident can be physically or mentally harmed by negligent medical care.

Prepare in advance and know that this is going to be a stressful chapter in your family’s history. Any existing issues may easily worsen in these circumstances, so try to give each other the benefit of the doubt. If necessary, speak with an elder law attorney, who can help advocate for your loved one and help your family navigate through these tough times.

06/14/2018

“Does your financial plan have a hole in it? Check to see if you have all five of the critical areas covered.”

The road to retirement continues to get more and more complicated. There are new products, new rules and new technologies. You need a guide. There are many of them out there—brokers, planners, agents, and money managers, all offering advice.

Kiplinger’s recent article, “5 Bases You Need Covered With Your Retirement Plan,” says there are plenty of financial professionals today who can get you started down the right path with investment advice. However, a professional who limits his or her professional life solely to investing advice, isn’t going to get you comfortably and confidently to your retirement goals. Be sure you have someone who will concentrate on these five key areas of your financial life:

Income Planning. Your retirement could last for decades. You must be certain that you’ll have reliable income streams to pay your monthly expenses. This area typically should cover things like Social Security maximization, income and expense analysis, inflation, a plan for the surviving spouse, longevity protection and investment planning. Once your income plan has been created, you need to analyze your remaining assets (those that you won’t have to draw from every month). This should cover your risk tolerance, adjusting your portfolio to reduce fees, volatility control, ways to reduce risk while still working toward your goals and comprehensive institutional money management.

Tax Planning. Your comprehensive retirement plan should include strategies to decrease tax liabilities, such as determining the taxable nature of your current portfolio, possible IRA planning, looking at ways to include tax-deferred or tax-free money in your plan, prioritizing tax categories from which to draw income initially to potentially reduce your tax burden and considering ways to leverage your qualified money to leave tax-free dollars to your beneficiaries.

It’s critical that your hard-earned assets go to heirs and loved ones in the most tax-efficient manner possible. Your financial adviser should work collaboratively with a qualified estate planning attorney to help with these tasks:

Maximize estate and income tax planning opportunities;

Protect any assets in trust and ensure that they’re distributed probate-free to beneficiaries and

Prevent your IRA and other qualified accounts from becoming fully taxable to beneficiaries upon death.

There’s much more to retirement than buying and selling: there are 30-plus years of financial security at stake. For that, you need a comprehensive plan and professional advice.